RadMan24

This is a great question and it really is at the core of the gas problem. If you give a texan $1 they will drill a hole....you really can't trust these guys, they often don't pay attention to the economics. That said, what will change it going forward, has to be shareholders (and other stakeholders like banks creditors). The CEOs will be forced to come around and focus on projects with positive IRRs otherwise they will be kicked out. The shareholders buying these companies right now are value/capital discipline oriented, and they won't stand for growth for the sake of growth. Creditors will also tighten standards. The good thing about crashes like this is it will force capital discipline into the energy sector. Every crash is the same, people act irrational, people get burnt, the trash is thrown out, everyone learns their lesson, and rational thought sets in (often to the other extreme). I am not even a nat gas bull i just think it will be like a reversion to the mean...low prices will cure low prices. Well banks are reigning in capital for oil and gas names. If nat gas shoots up to 6 in a few years, the producers who are left are likely going to be able to enjoy high returns, before a bunch of companies get credit and ramp up again. Cyclical industries do pay off, just got to pick the ones who will survive and flourish in the up turn. --Assuming the industry is positive on demand growth, something like coal gotta be super careful.

Just to entertain the idea, even if we have two quarters of -.3% growth or something...and bounce back...is that the end of the world? The energy bust is for real, and onc it shakes itself out, things will improve on the investment end of GDP. I just remind myself that it's possible, and that earnings could decline, but that also provides opportunities.

Makes sense. Only in times of distress do those large cap companies really become appealing.

Could it be fair to say this guy just wasn't good?

Yea, for instance. I had a holding that dropped 40% (bought too soon) and wanted to keep it, but didn't really want to keep adding more. So I just converted it to the Roth. Initial cost basis say was $5,000, but on the day of conversion, it was only $3,000, which is the tax basis reported to the IRS. Hope and strategy is that it will recover and grow taxfree in the Roth.

So what about Ethlyene and LPGs? Niche market. Exports going to boom. Takes technical knowhow and disciplined capital allocation. I have an idea, NVGS.

Own up to mistakes, learn from them, and don't forget what happened--Still a learning process, but the idea is powerful.

I'll take a CEO who allocates capital wisely and is disciplined with capital. If you read through Suncor's 10-Ks, you'll see how dramatic the change Steve Williams has done changing Suncor from a growth only to a disciplined capital company. Peyto has done a good job to date, but Gear is heavy oil with no operational leverage or scale advantage. Suncor has scale, efficiently, and free cash flow. It is well on its way to increasing production to 700,000 boe/d by 2019. Oil Sands are long-term investments, but Suncor has has integrated refineries to capture Brent market pricing unlike all of its peers.

How would you rate Ultra's asset swap in 2014, positive or negative?

Suncor requires some adjustments. The cash flow is what to look at, as earnings can be distorted with exchange rates. I swear Consol's coal segment has higher returns, but regardless, on to Alliance. With Alliance, you have pretty good insider ownership. It is a dual structure, one is the general partner and the other is the LP, both are MLPs. So if you want the full return on capital, going to have to own both. It's kinda remarkable honestly that they have remained so profitable. People seem to discount them because of this, they want to invest in the other coal names because they have a more speculative appeal. Their mines are close to utilities, they are in both the Indian and Northern App. coal basins, which are benefiting from the installation of scrubbers and low cost underground mining. These basins were once thought of being extinct because of EPA regulations. EPA made dirtier coal clean essentially. There mines are very productive and operating margins are very solid. Hence, the strong returns. How you value them is up to you. Currently, about 10% distribution yields, so a significant amount of excess capital is distributed to the general partner structure and LP units. The remaining capital is used for growth opportunities and sustaining capex. They have the ability to pick up additional sales contracts or mining assets with more bankruptcies. The coal market probably doesn't attract the most talented executives, as you bluntly noticed with the many who are flirting with bankruptcy. But, these guys have a pretty good track record. You can order 2009-2014 annual reports and they'll arrive fairly quickly.

These off hand comments may sound good but are not true. Can you please name one coal company that has consistently earned 12-14% on capital in the last couple years? I'll spare you the effort as Peabody, Alpha, Arch, and Walter have all had negative returns on capital for the past couple years, most of them for 3-5 years. Teck, part of which is coal, has earned 2% on capital for the last couple years. The average return on capital for all oil and gas companies in Canada is -1.5% for both Q4 2014 and Q1 2015 of this year according to Statscan. Mining is a positive 3%. In general, the Canadian oil and gas sector does not make money which makes it tough to have a return on capital Suncor, which was mentioned, will be lucky to earn about 2% on capital this year. To be fair, Peyto earn 10% on capital last year, not the numbers you quoted, in a tough NG price environment. Alliance Resource Partners and Consol Coal Resources. Suncor Energy will likely earn about 6-7% return this year.

Steve Williams at Suncor Energy. Look at what he has done since he took over. Suncor has a cash cow asset, accretive shareholder actions, and disciplined capital allocation. It may be a large cap, but it is significantly discounted and misunderstood. Imperial Oil is well run as well. But Imperial is there to serve Exxon's interests in addition to shareholders. Weigh the plusses and minuses, but Suncor is my large bet. That said, I would like to find some nat gas exposure, in some way. I've been sucking my thumb too long on finding a good one. Lots of people like Peyto..but there is a serious premium to their shares compared to some overleveraged peers and Peyto's return on capital appears to be 12-14% over the last few years (given that is a crude estimate). I mean there are coal companies that have earned that in the past couple of years and they are in the shit bucket.

I have to admit...that was great, Buffett really did point out the irony in Winter's accusation on "pay and performance" disconnect with Coke.

Wait...if I open up a RIA and I wanted to have a hurdle of 6% return before I take an asset under management fee of 1% , would this be allowed? Or no because it is considered performance-fees?

WY,lumber baby